Is China's Economy Growing Or Shrinking?

Back in May 2024, I had a post titled “So How Are Things Going In China?”   The post was inspired by a New York Times article of April 15 of that year that had reported that China’s economy had grown “more than expected” in the first three months of 2024; and by a just-issued IMF prediction that China’s economy would grow by 5% in 2024.  To believe the New York Times and the IMF, in 2024 the Chinese economy was growing at an annual rate of 5% or more.  For 2025, China again reported a GDP growth rate of about 5%.   

Meanwhile, the reported rates for U.S. GDP growth were 2.8% for 2024 and 2.1% for 2025.  It looks like China is beating the pants off us.  Surely, it can only be a few more years before China’s economy overtakes ours as the largest in the world.

Well, maybe things aren’t quite that simple.  On March 19 the Wall Street Journal had two pieces giving a very different perspective, one in the news pages by Jon Emont, and the other on the editorial page by Joseph Sternberg.  Emont’s piece has the headline “Beijing’s Big Problem: An Incredible Shrinking Economy.”

How could China’s economy be “shrinking” when it consistently reports annual GDP growth of 5% or more?  Emont:

[B]y one important measure, China’s global heft is shrinking. In dollar terms, China’s gross domestic product, as a share of the global economy, peaked in 2021 at around 18.5%, when it grew to be around three quarters of the size of the U.S. economy. Many economists predicted China’s explosive growth would eventually make its economy bigger than that of the U.S.  Instead China’s share of the pie has decreased, ending 2025 at around 16.5% of the global economy. It is now less than two-thirds the size of the U.S. economy, according to International Monetary Fund data.